Friday, June 17, 2011

The Mysterious Quarterly Shift by the New York Fed of $100 Billion

Bob English points out to me that there has been an unusual quarterly shift of $100 billion near the end of each quarter in the accounts of the New York Federal Reserve from "other deposits held by depositary institutions" to "U.S Treasury General account". This started right as the height of the financial crisis in October 2008 and is still on-going.

Writes English:
When I pulled the historical data, it's evident this is a periodic occurrence, which has been happening roughly every three months--middle of March, June, Sep, Dec. 

Prior to October 2008, the Treasury account at the Fed (going back to inception of data in Dec 2002) was pretty constant at about $5 B, with a couple of exceptions. 
There might be an innocent explanation for this, but it sure looks like someone needs to change a balance sheet somewhere at the end of each quarter. If there ever was something that would stand out during a real audit of the Fed, it would be a transaction such as this. Auditors would certainly want to see what was going on with these transactions. Here's a pic of the June 2011 entries when the transactions took place for the quarter about to end:

Click for larger view.

UPDATE: More from English

Below is straight from the Fed's accounting manual. I thought the bolded phrase might indicate the fluctuations are from the excess operating profits that are remitted to the Treasury. However, this is a separate line item "Interest on FR Notes". Interest on FR Notes might accrue in the Treasury Gen Acct after they are paid weekly, but these payments are at most a few billion. This would not account for $100 B swings. Because the swings started happening after the LSAPs, I don't see how it can be explained by any of the other listed items either, such as tax receipts. Payments for Goods or Svcs sounds a bit Pentagon-ish in its generality. What services might those be? .

10.50 U.S. Treasury-General Account (220-100)

As part of its function as Fiscal Agent for the United States Treasury, and as provided by Section 13 of the Federal Reserve Act, each of the Reserve Banks maintains a deposit account for the Treasury. Deposits in this account include funds realized on the sale of government securities or savings bonds, Federal tax receipts, payments for goods or services rendered by the Government, and payments of Reserve Bank earnings. The account is used by Treasury to make interest payments and redemption payments on government obligations and to pay government checks and other items drawn on the account. Prior to closing each day's books, the balance in this account is consolidated at the New York Reserve Bank.


  1. That's funny. As I was reading the top part, I was saying to myself "isn't that about the amount for excess reserve payments from your other blog post."

  2. Oops, I think that was $100M, not $100B. I could be a politician. I'm only off budget by 3 orders of magnitude.